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2021 (2) TMI 252 - HC - Service TaxRejection of application (declaration) filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of declaration under the category of investigation, enquiry or audit - whether the writ applicant was eligible to avail the benefit of the scheme under the category of investigation, enquiry or audit? - HELD THAT - It is required to be noted that, at the time of issuing the letter dated 28.06.2019, there is no any whisper by the authority that, the amount fixed as a duty was subject to further audit. We also take the notice of the fact that, while issuing statement in Form SVLDRS -2, after considering the declaration made by the writ applicant, the amount payable ₹ 1,22,18,781.05/ determined and estimated by the authority and the same amount reflected in the impugned Form SVLDRS -2. Therefore, at the one hand, while issuing statement in Form SVLDRS -2 by the Designated Committee estimated the amount equal to the amount declared by the writ applicant in Form SVLDRS- 1 i.e. ₹ 1,22,18,781.05/ and on the other hand, without any clarification, one note appended to the Statement in Form SVLDRS -2 mentioning therein that, there was a variance in the quantification of the amount under the draft audit report and letter dated 28.06.2019. If the authority did not have agreed with the amount as declared by the writ applicant, then they should not estimated the amount equal to the amount declared by the writ applicant or they could have been estimated the higher amount against the amount declared by the writ applicant. The communication dated 28.06.2019 would indicate that the respondent No.1 had quantified the amount by way of written communication. Referring to the Circular of the Board dated 27.08.2019, more particularly para 10 (g) of the said Circular, clarified in the context of various provisions of the Act, 2019, that, the cases under an enquiry, investigation or audit, where the duty demand has been quantified on or before 30th day of June, 2019 are eligible under the scheme. Section 2(r) defines quantified as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that, such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit or audit report etc. Therefore, we hold that, in the instant case, the respondent No.1 had quantified the tax amount payable by the writ applicant and same was communicated by way of letter dated 28.06.2019. Thus, the tax dues were quantified on or before 30th June, 2019. In such circumstances, we have no hesitation to hold that, the writ applicant has duly complied with the eligibility criteria laid down under the SVLDRS Scheme, 2019 and the writ applicant was eligible to file an application as per the Scheme under the category of investigation, enquiry or audit. Action of the respondent No.1 in issuing statement in Form SVLDRS -2 was against the provisions of the Finance Act, 2019 and Rules thereunder - HELD THAT - After filing the application in statement in form SVLDRS- 1 intimating the total tax dues of ₹ 2,52 95,051/ based on the amounts quantified and communicated to the writ applicant by letter dated 28.06.2019, the net amount payable by the writ applicant was mentioned ₹ 1,22,18,781.05/ and in response to the declaration, the Designated committee had estimated the same amount declared by the writ applicant and the same was confirmed by the writ applicant in issuing the statement in Form SVLDRS -2. Therefore, when the liability of tax amount estimated by the authority equal to the amount declared by the writ applicant, then, there is no reason for the authority to issue statement in Form SVLDRS -2. The respondent No.1 tried to defend the issuance of statement in Form SVLDRS -2 in their reply stating, inter alia that, the statement in Form SVLDRS dated 07.02.2020 was issued for the clarification with regard to the quantification amount was in variation with quantification letter dated 28.06.2019. Opportunity for personal hearing - HELD THAT - As per the provision, if declarant is not agree with the amount determined by the Designated Committee, he having given right to hearing to explain why he is not agree with the estimated amount determined by the Designated Committee - In the instant case, there is no dispute with regard to estimated amount determined by the Designated Committee. Notice for hearing was for the limited issue with regard to agreement or disagreement with the estimated amount determined by the authority. Record shows that, in statement in Form SVLDRS -2, no specific notice for affording the opportunity of hearing was given to the writ applicant with regard to variance of quantified amount - there is no hesitation in holding that the action of the respondent No.1 issuing statement in Form SVLDRS -2 is in contravention of the Section 127 (1) read with Rule 6 (2). The decisions of rejecting the application by the respondent No.1 were in violation of principles of natural justice. It appears from the record that, no specific amount of variance being brought into notice of the writ applicant. The only remarks appended to the statement in Form SVLDRS -2 without any specification, is not sufficient to hold that, the principles of natural justice have been complied by the respondent No.1. The contents of the rejection letter would go to show that, in the absence of any clarification on the part of the Designated Committee, the application was rejected. In this circumstances, we are of the view that, no sufficient reason being assigned on the issue of variance of the amount while rejecting the application. It is required to be noted that, the amount of variance with regard to quantification having not specifically mentioned in the statement in form SVLDRS -2, nor being stated in the rejection application. Had the respondent No.1 provided the varied estimate in the statement in Form SVLDRS -2, the writ applicant would have submitted their response and sought a personal hearing. It is pertinent to note that, against the rejection of the letter dated 05.05.2020, the writ applicant had requested twice for process of the application. However, the respondent No.1 did not have assign any reason with regard to varied amount. Therefore, the whole process undertaken in this case was not fair and the mechanical rejection of the application is against the settled principles of natural justice. It is settled that, any order which has civil consequences must be passed after giving an opportunity to be heard. The statement in Form SVLDRS -2 dated 07.02.2020 is in contravention of the provisions of the Act and the Rules thereunder and the same deserves to be quashed and set aside and accordingly, it is quashed and set aside. Consequently, the impugned rejection letters dated 05.05.2020 and 11.06.2020 are also quashed and set aside - Application allowed.
Issues Involved:
1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. 2. Legality of the statement issued in Form SVLDRS-2. 3. Rejection of the application under the Scheme. 4. Violation of principles of natural justice. Issue-wise Detailed Analysis: 1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019: The petitioner sought to avail benefits under the Scheme, 2019, for settlement of excise duty. The core issue was whether the petitioner was eligible under the category of investigation, enquiry, or audit. The petitioner argued that the duty amount was quantified by the respondent through a letter dated 28.06.2019, which directed the petitioner to discharge the tax liability. The respondent contended that the letter was interim and the final amount was not determined before the cut-off date of 30.06.2019, making the petitioner ineligible. The court found that the letter dated 28.06.2019 did quantify the tax dues, making the petitioner eligible under the Scheme. 2. Legality of the statement issued in Form SVLDRS-2: The petitioner challenged the issuance of Form SVLDRS-2, arguing it was contrary to the provisions of the Scheme. According to Section 127 of the Finance Act, 2019, if the amount estimated by the Designated Committee equals the amount declared by the declarant, Form SVLDRS-3 should be issued. The Designated Committee had estimated the same amount declared by the petitioner, yet issued Form SVLDRS-2, which was deemed unnecessary and in contravention of the Scheme. The court held that issuing Form SVLDRS-2 was incorrect as the estimated amount matched the declared amount. 3. Rejection of the application under the Scheme: The application was rejected on the grounds that it was not eligible under the category of investigation, enquiry, or audit. The rejection letters dated 05.05.2020 and 11.06.2020 stated the application did not fulfill the criteria and no clarification was provided by the petitioner. The court found that the rejection was based on an incorrect interpretation of eligibility and that the petitioner had complied with the Scheme's requirements. The court quashed the rejection letters, directing the Designated Committee to reconsider the application. 4. Violation of principles of natural justice: The petitioner argued that the rejection was in violation of natural justice principles as no opportunity for a hearing was provided. The court noted that the Form SVLDRS-2 did not specify the variance in the quantified amount, and no proper notice or opportunity for a hearing was given. The court emphasized that any order with civil consequences must be passed after giving an opportunity to be heard. The court held that the rejection process was unfair and violated natural justice principles. Conclusion: The court quashed the statement in Form SVLDRS-2 and the rejection letters dated 05.05.2020 and 11.06.2020. It directed the Designated Committee to decide the application afresh, providing an opportunity for a hearing and passing a reasoned order within 8 days from the receipt of the court's order. The writ application was allowed, and the civil application for stay was disposed of accordingly.
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